Levy will reduce number of passengers flying out by 835,000 yearly

The tourism sector accounts for 13.4% of Malaysia’s GDP, which is significantly supported by air transport, says the International Air Transport Association.

KUALA LUMPUR: The International Air Transport Association (IATA) has asked the government to reconsider the implementation of the Departure Levy Bill 2019, which was passed in the Dewan Rakyat yesterday.

IATA regional vice-president for Asia-Pacific Conrad Clifford said the air passenger departure levy has the potential to do more harm than good to the local economy as it will dampen demand for travel.

“The imposition of the levy would also erode Malaysia’s competitiveness as a tourist destination in the region to the detriment of its economy,” he said in a statement today.

Based on IATA’s analysis, the introduction of the levy will reduce the number of passengers departing Malaysia by air by up to 835,000 per year.

It will also decrease the aviation sector’s gross domestic product (GDP) contribution by up to US$419 million (RM1.7 billion) and see a reduction of up to 5,300 jobs.

Clifford said the implementation of the departure levy also contradicts the existing policies on taxation published by the International Civil Aviation Organisation (ICAO).

“As an ICAO Council member, Malaysia should demonstrate leadership in adhering to ICAO’s policies,” he said.

It was reported that the departure levy will be enforced on June 1, and will be RM20 per passenger for those departing to Asean countries and RM40 for other countries.

In 2017, the Malaysian aviation sector employed 450,000 people and contributed US$10.1 billion to the country’s GDP.

“The broader tourism sector accounted for 13.4% of Malaysia’s GDP, which is significantly supported by air transport,” Clifford added.

IATA is a global trade association for airlines, representing over 290 airline members, including Malaysia Airlines, Malindo Air, Singapore Airlines, Silk Air and All Nippon Airways, accounting for 82% of total global air traffic.